Tesla stock took a sharp dive on Tuesday, falling nearly 15% after former President Donald Trump publicly rebuked CEO Elon Musk, escalating tensions that have already been weighing on investor confidence.
The stock began sliding around midday following Trump’s latest comments targeting Musk, his once-close ally turned political critic.
The fallout appears to be shaking market faith in Musk’s leadership amid broader concerns about Tesla’s direction and political exposure.
Tesla shares have now dropped more than 10% year-to-date, with investors increasingly uneasy over Musk’s growing political entanglements and perceived distraction from the company’s core business.
His recent alliance and subsequent rupture with Trump has invited public backlash and reputational risk for the electric vehicle giant.
Adding to the pressure, a new Republican-led spending bill includes a controversial provision that would roll back federal tax credits for EV purchases—benefits Tesla has long relied on to fuel demand.
The proposal, reportedly backed by Trump, is seen as a direct threat to Tesla’s growth prospects in the U.S. market.
It’s a stark reversal from post-election optimism, when Tesla shares briefly rallied on hopes that Musk’s political closeness to Trump could translate into favorable policy and contracts.
